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| Burkhard Raunig |
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| ''Stop breaking down: A graphical analysis of proxy variable and instrumental variable solutions to omitted variable problems'' |
| ( 2017, Vol. 37 No.3 ) |
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| This graphical analysis discusses cases where proxy variable and instrumental variable solutions to omitted variable problems may break down. The analysis shows that the effectiveness of proxies and instruments depends crucially on the precise causal link between the omitted variable and the explanatory variables included in a structural model. |
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| Keywords: Omitted variable, proxy variable, indicator, instrumental variable |
JEL: C1 - Econometric and Statistical Methods: General
C2 - Single Equation Models; Single Variables: General |
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| Manuscript Received : Dec 30 2016 | | Manuscript Accepted : Aug 31 2017 |
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